Lots of exposure to Greece.
You’re exchanging the risk of holding the money yourself, which is the risk of theft and risk of devaluation due to inflation, for the risk that the bank will not honour your deposit, for whatever reason. Often, that risk will be lower - and it’s quite possible that it still is in Cyprus, if the banks are paying any interest on deposits.
I think the crux of the speculation argument is that, normally, speculation entails chasing high returns for high risk. Now, even if the high risk was there, did the Cypriot banks return substantially more than what you could get elsewhere in Europe?
That was, indeed, the case with Iceland, so since they were offering well above average returns, I’m comfortable with calling foreign investors there “speculators”. But if that was not the case with Cyprus, then they were not chasing high returns in exchange for risk, they were chasing favorable tax treatement and money laundering in exchange for risk.
I wonder if any euro policymakers might be feeling at all nervous for crossing Russian mobsters this way? Here’s something from last month, for example.